Trackers come out on top

Index tracker funds have proved far more successful than their actively-managed counterparts over the past 20 years, according to a report from statisticians WM.

Over any five-year period since 1979, investors in an active fund had only a one-in-four chance of outperforming a tracker, the WM study shows.

The figures take management charges into account but not the difference between the buying and selling price of units.

Over the full 20-year period, the chance of outperforming reduces. Of the 16 funds with a 20-year history, only four were profitable and the volatility of performance was higher with active funds than passive trackers.

In 1982 the best active return was 58% and the worst 4%. More typically, the range between best and worst was around 25%-30%.